It was a tough week for Indian shares as the BSE Sensex fell nearly 3 percent and the Nifty lost 3.3 percent as U.S. Fed chief Bernanke’s suggestion that stimulus measures may be scaled back at one of their next few meetings dented sentiment. Here's a look at the top Sensex losers and gainers. Full Article
For months, markets have been dancing to central bankers' tune, but that may now be changing, writes James Saft. Full Article
Confused while buying stocks? Get buy, sell or hold recommendations from VantageTrade. Full Coverage
Column: Will Gupta get off? Clues in bail ruling: Frankel
NEW YORK |
NEW YORK (Reuters) - On Tuesday, Judges Jose Cabranes and Reena Raggi of the 2nd U.S. Circuit Court of Appeals ordered that former Goldman Sachs (GS.N) director and McKinsey chief Rajat Gupta remain free on bail while his lawyers try to get his insider trading conviction overturned on appeal. That's an unusual order from the appeals court, which typically defers to the judgment of the trial court on post-conviction bail. In this case, U.S. Senior District Judge Jed Rakoff, who oversaw the insider trading trial in June, refused to grant Gupta's bail request.
The bar is quite high for the appeals court to permit a convicted defendant to defer serving a prison term. When Congress enacted the Bail Reform Act in 1984, its intention was to make bail a rare exception for convicted defendants, not the rule. The law said that post-conviction bail would only be granted if the appeal "raises a substantial question of law or fact likely to result in a reversal or an order for a new trial." The 2nd Circuit clarified that standard in a 1985 decision called U.S. v. Randell, holding that defendants did not have to show that their appeal was likely to result in a reversal - a near impossible burden to meet - but that the appeal involved issues of such importance that if the defense prevailed, the conviction would likely be overturned. That's a less formidable hurdle for convicted defendants, but it's still tough enough that, according to former prosecutor Evan Barr of Steptoe & Johnson, who has written about the topic, post-conviction bail orders are "definitely not the norm."
The grant of bail to Gupta, Barr said, means that the appeals court "has concluded that he has raised non-frivolous issues." That's good news for Gupta, whose motion to stay enforcement of his two-year prison term cited five potential grounds for overturning his conviction.
The overall theme of the brief is that at trial, Rakoff granted the government too much leeway to introduce hearsay evidence and afforded too little latitude for Gupta's evidence. At Tuesday's oral argument on the motion, Gupta's appellate counsel, Seth Waxman, focused on Rakoff's admission of wiretap evidence of a phone call between alleged Gupta tippee Raj Rajaratnam and a Galleon Group employee named David Lau; and on the exclusion of testimony from Gupta's daughter, who would have told jurors that before the supposed tips were passed, her father had said he believed Rajaratnam had swindled him out of millions of dollars. Gupta's contention is that Rakoff erroneously applied the co-conspirator exception in permitting hearsay evidence from the wiretap call and had no basis for keeping out the testimony of his daughter. According to Gupta's brief, if the judge had ruled differently on either point (or several others), he would not have been convicted.
The 2nd Circuit's bail grant indicates that, at the very least, Cabranes and Raggi consider Gupta's arguments to be worth considering. But does it mean more than that? Should we regard the bail order as a preview of how the appellate court will ultimately rule on Gupta's conviction?
Not necessarily. First of all, the two judges who heard Gupta's bail motion (after a third judge, Susan Carney, recused herself) are probably not the judges who will hear the merits of his appeal, which will be assigned to a separate three-judge panel. Rakoff, whose rulings Gupta has questioned, is generally well regarded by the 2nd Circuit, where he often sits by designation; in fact, Rakoff joined Raggi and Cabranes on an appellate panel on Tuesday afternoon, after the 2nd Circuit judges granted bail to Gupta. Proving Rakoff errors on the merits won't be easy.
There's also a chance that the 2nd Circuit judges had the length of Gupta's two-year sentence -- and not the merits of his case -- uppermost in their minds when they granted bail. Ac c ording to Barr of Steptoe, when defendants are sentenced to relatively short prison terms, there's a concern that by the time their appeal is resolved, they may have already served a big chunk of their allotted years in prison. (There are other reasons to appeal beside avoiding prison time, of course. White-collar defendants like Gupta also want to avoid paying fines, restitution and legal fees that would otherwise be borne by employers.)
There's no guarantee, in other words, that bail presages appellate exoneration. Several other high-profile white-collar defendants who were granted bail during appeal saw their convictions ultimately upheld. (I'm indebted to lawyers for Lewis "Scooter" Libby, the since pardoned advisor to former vice president Dick Cheney, who compiled a list of these defendants in an unsuccessful 2007 bid for bail for Libby.) Martha Stewart (MSO.N) , Bernard Ebbers of WorldCom, Kirk Shelton of Cendant and John and Timothy Rigas of Adelphia were all permitted to remain free on bail while they appealed their convictions, according to Libby's list. None of t heir appeals was successful.
On the other hand, in at least two big white-collar cases -- those of former Morgan Stanley (MS.N) analyst Frank Quattrone and former Jack Abramoff associate David Safavian -- the grant of bail did end up foreshadowing a successful appeal. Quattrone's case, like Gupta's, was in the 2nd Circuit; in another 2nd Circuit white-collar case in which the court granted post-conviction bail, accused insurance fraudster Solomon Kaplan saw most, but not all, of the counts of his conviction tossed on appeal.
Gupta, in other words, should be heartened by the grant of bail but not overconfident that he'll ultimately be cleared.
His lawyers declined comment, as did a representative of the U.S. Attorney's office in Manhattan.
(Alison Frankel writes the On the Case blog for Thomson Reuters News & Insight newsandinsight.com. The views expressed are her own.)
(Reporting by Alison Frankel; Editing by Ted Botha)
- Tweet this
- Share this
- Digg this